Central Banker Urges Caution By Lenders Battling Red Ink

One-fifth of Russia's 2,600 registered commercial banks operated in the red during the second quarter of this year, Central Bank First Deputy Chairman Alexander Khandruyev said Wednesday.

Officials said the number was not surprising, giving the liquidity problems facing many Russian banks, but Khandruyev urged the banks "to act very carefully and conduct a reasonable credit policy," Interfax reported.

"We expect the situation in most of them will get better," said a Central Bank spokeswoman, Natalya Khomenko. "It doesn't mean that those banks will necessarily face license revocation."

Khandruyev said the overall figure of banks operating in the red could be higher because some failed to provide accurate financial statements,

But he added that while the banking sector is currently in fragile condition, there is a positive trend toward improvement."

"We are seeing a new wave of bankers bred not only on inflation euphoria, when it's easy to make quick profits, but trained to adjust to macroeconomic stabilization and be guided by strategic, not immediate, interests, including international banking experience," he told Interfax.

Last month the Central Bank revoked the license of Tveruniversalbank, Russia's 17th largest, prompting concern about a possible banking crisis.

It also recently imposed temporary administrations on Kommerchesky Narodny Bank, a medium-size Moscow institution, and the smaller Gorny Altai bank because of financial difficulties.

But the Central Bank this month also ended its temporary administration of Unikombank after deciding that the institution made progress in solving its problems.

Interfax reported Monday that major creditors of Tveruniversalbank plan to meet with Khandruyev and the troubled bank's former president, Alexandra Kozyreva, to discuss repayment of the banks debts to creditors.